Did the NC State Personnel Commission have the legal authority to roll out 'career banding' (a system that collapses many narrow job classes into a small number of broad classes with wide pay ranges)?

Plain-English summary

"Career banding" is a personnel-system redesign that the NC Office of State Personnel (OSP) and the State Personnel Commission began rolling out in 2002. The basic idea: instead of having hundreds of narrow job classes with rigid pay grades, group jobs into a much smaller number of broad "bands" (e.g., "Information Technology Manager Band") with wide pay ranges. Managers gain flexibility to set salaries within the band based on skill, performance, and labor market data.

State employees and others questioned whether the Commission actually had legal authority to make this kind of structural change to the classification system. Could the Commission collapse a hundred IT job classes into one band without the legislature passing a statute first?

The AG answered yes, on three grounds:

1. Plenary classification authority. G.S. 126-4(1) gives the Commission authority to adopt rules providing for "the classification and reclassification of all positions subject to this Chapter according to the duties and responsibilities of the positions." Nothing in that text limits the Commission to a particular number of classes, or requires narrow classes. Choosing to have fewer, broader classes is itself an exercise of the classification power.

2. Plenary compensation authority. G.S. 126-4(2) gives the Commission authority to adopt rules for "minimum, maximum, and intermediate rates of pay for all employees subject to the provisions of this Chapter." Pay ranges of any width are within this authority. The Commission can make the ranges wider as long as they still set minimum, maximum, and intermediate rates.

3. Plenary qualifications authority. G.S. 126-4(3) gives the Commission authority to set reasonable qualifications "for each class of positions." When the Commission creates fewer broader classes, it correspondingly redefines the qualifications attached to each class. That redefinition is also delegated.

The opinion leans on N.C. Dep't of Justice v. Eaker, 90 N.C. App. 30 (1988), which held that the Commission has rulemaking power over personnel matters and that those rules have the force of law. Career banding is just a particularly large exercise of the same authority that supports any reclassification or pay-range change.

Finally, the AG noted that the General Assembly itself effectively ratified career banding in SL 2006-66, § 22.15A.(a) (later amended by SL 2006-221, § 21A.(a)). That section suspended career-banded classifications that weren't approved by June 15, 2006, and required full implementation by February 1, 2007. Setting a deadline for implementation makes sense only if the underlying classifications were valid. The legislature thus operated on the premise that the Commission had the authority it claimed.

Signed by Senior Deputy AG Ann Reed, Special Deputy AG Lars Nance, and Special Deputy AG Valerie Bateman.

Currency note

This opinion was issued in 2006. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The State Personnel Commission and the Office of State Personnel were replaced by the State Human Resources Commission and the Office of State Human Resources in 2013. Career banding has gone through multiple revisions since 2006. Anyone applying this opinion to a current state-personnel question should consult the current version of Chapter 126 and look at later policy statements from OSHR.

Common questions

Q: What is career banding?
A: A classification approach that groups many related jobs into a small number of broad "bands" instead of a long list of narrow classes. Each band has a wide pay range, and individual salaries are set based on competencies, market data, and performance rather than rigid step systems.

Q: Why did NC adopt career banding?
A: The stated goals were to give state agencies more flexibility to compete with the private-sector job market, simplify a sprawling classification system, and tie pay more directly to skills and performance rather than tenure.

Q: What makes a delegation of authority valid in NC?
A: NC follows the general principle that the legislature can delegate rulemaking authority to administrative agencies if it provides adequate standards. Chapter 126 says the Commission shall apply "the best methods as evolved in government and industry," which the courts have treated as a sufficient standard for personnel-system design.

Q: Could the legislature override career banding?
A: Yes. The Commission's authority is delegated, so the legislature could rescind it, impose specific class structures, or limit pay ranges by statute. The 2006 session-law deadline shows the legislature actively monitoring the rollout.

Q: What about pre-2002 employees whose old classifications were eliminated?
A: The opinion doesn't address individual-employee impact. State personnel rules typically include grandfather provisions and salary-protection provisions when restructurings would otherwise cut a current employee's pay. Those mechanics fall under the Commission's separate rulemaking authority.

Q: Are local-government employees covered by this?
A: No directly. Chapter 126 covers state-government employees in agencies subject to the State Personnel Act, plus certain local employees (county social services, county health, county mental health) made subject to the Act for specific functions. Local-government employees outside those categories are governed by local personnel ordinances, not by the State Personnel Commission's banding decisions.

Background and statutory framework

The State Personnel Act (Chapter 126) was passed in 1965 to create a merit-based personnel system for North Carolina state employees. The Act created the State Personnel Commission as the rulemaking body and the Office of State Personnel as the operational arm.

Chapter 126 delegates broad authority. G.S. 126-1 sets the purpose clause ("a system of personnel administration under the Governor, based on accepted principles of personnel administration and applying the best methods as evolved in government and industry"). G.S. 126-4 then lists the specific rulemaking powers, including the classification, compensation, and qualifications powers that the AG identified as the legal basis for career banding.

NC courts have read these delegations broadly. N.C. Dep't of Justice v. Eaker, 90 N.C. App. 30 (1988), upheld the Commission's authority to adopt rules governing "appointment, promotion, transfer, demotion, and suspension" of state employees under G.S. 126-4(6), and to adopt "programs and procedures as may be necessary to promote efficiency of administration" under G.S. 126-4(10). Eaker also confirmed that Commission rules have the force and effect of law.

Career banding is structurally just a large reclassification combined with a redrawing of pay plans. The novelty is the scale of the change (collapsing many narrow classes into a few broad bands), not the kind of action. Under Eaker and the plain text of G.S. 126-4(1)-(3), the Commission has authority to do that.

SL 2006-66, § 22.15A.(a) is a useful textual signal. The provision says career-banded classifications not approved by June 15, 2006, are suspended, and the rest must be fully implemented by February 1, 2007. The General Assembly does not normally set implementation deadlines for unauthorized agency actions; the deadline is itself recognition that the Commission had the authority to do what it was doing. The 2006-221 amendment made minor adjustments without questioning the underlying delegation.

Citations

• N.C.G.S. § 126-1 (purpose of State Personnel Act)
• N.C.G.S. § 126-4 (Commission rulemaking authority)
• N.C.G.S. § 126-4(1) (classification plans)
• N.C.G.S. § 126-4(2) (compensation plans, minimum/maximum/intermediate rates)
• N.C.G.S. § 126-4(3) (qualifications for each class)
• N.C.G.S. § 126-4(6) (appointment, promotion, transfer, demotion, suspension)
• N.C.G.S. § 126-4(10) (efficiency programs and procedures)
• 2006 N.C. Sess. Laws c. 66, § 22.15A.(a) (career banding deadlines), amended by 2006 N.C. Sess. Laws c. 221, § 21A.(a)
• N.C. Dep't of Justice v. Eaker, 90 N.C. App. 30 (1988) (Commission rules have force of law)

Source

• Landing page: https://ncdoj.gov/opinions/authority-of-state-personnel-commission-to-implement-career-banding/

Original opinion text

• (1) Position classification plans which shall provide for the classification and reclassification of all positions subject to this Chapter according to the duties and responsibilities of the positions.

• (2) Compensation plans which shall provide for minimum, maximum, and intermediate rates of pay for all employees subject to the provisions of this Chapter.

• (3) For each class of positions, reasonable qualifications as to education, experience, specialized training, licenses, certifications, and other job-related requirements pertinent to the work to be performed.

G.S. 126-4. As the courts have recognized, the legislature created the State Personnel Commission with a specific purpose in mind:

The purpose of Chapter 126 is "to establish for the government of the State a system of personnel administration under the Governor, based on accepted principles of personnel administration and applying the best methods as evolved in government and industry." G.S. 126-1. In addition to the power to promulgate policies and rules regarding the "separation" of employees, the Commission has the same policy and rule making power over "[t]he appointment, promotion, transfer, demotion, and suspension" of employees under G.S. 126-4(6) and "programs and procedures as may be necessary to promote efficiency of administration and provide for a fair and reasonable system of personnel administration" under G.S. 126-4(10). Chapter 126 clearly gives the State Personnel Commission the power to establish rules and policies governing personnel matters.

N.C. Dep't of Justice v. Eaker, 90 N.C. App. 30, 33-34, 367 S.E.2d 392, 395, disc. rev. denied, 322 N.C. 836, 371 S.E.2d 279 (1988). Moreover, such policies adopted by the Commission have the force and effect of law. Id. at 38, 367 S.E.2d at 398.

The Commission therefore has clear authority to conclude that fewer and broader classes with wider pay ranges are examples of the "best methods" of personnel administration and to implement changes in the job classification system which would result in broader and fewer classes of jobs which more accurately describe the work being done by the occupants of the jobs. The power delegated to the Commission is the power to adopt rules to "provide for the classification and reclassification of all positions subject to this Chapter according to the duties and responsibilities of the positions." G.S. 126-4(1). In addition to its plenary authority over job classification (G.S. 126-4(1)), the Commission also has plenary authority under G.S. 126-4(2) over compensation, or pay, plans. Likewise, the project of revising the pay plans falls well within the Commission's statutory authority granted by the legislature in G.S. 126-4(2).

In addition to the specific authority granted by the legislature over classification and compensation systems, the Commission also has been granted authority over the development of qualifications for each position in the classification system. See G.S. 126-4(3) ("For each class of positions, reasonable qualifications as to education, experience, specialized training, licenses, certifications, and other job-related requirements pertinent to the work to be performed.") Together, the delegation of authority to the Commission over classification matters, compensation matters, and the determination of the necessary qualifications for each position classified all support the conclusion that the Commission had the requisite authority to approve the career banding project begun in 2002 by the Office of State Personnel.

Finally, in SL 2006-66, § 22.15A.(a), amended by SL 2006-221, § 21A.(a), the Legislature suspended all career banded classifications not approved by June 15, 2006, and fully implemented by February 1, 2007, and permitted already banded classifications to be incorporated into the Payroll (BEACON) program. Such legislation is additional authority for the proposition that the State Personnel Commission had the requisite authority under then-existing law to approve the career banding classifications.

I trust that this responds to your questions. Should you need additional information, please do not hesitate to let us know.

Sincerely,

Ann Reed
Senior Deputy Attorney General

Lars F. Nance
Special Deputy Attorney General

Valerie L. Bateman
Special Deputy Attorney General